Crypto was criticised a lot in 2022, with the fallen of 3AC and FTX in particular. But the criticising follows crypto from day 1 of its birth, so it's not a big deal for the true believer. What important is during the past decades, we have seen some game-changing applications in the blockchain. And there will be more in the upcoming decades, and I am bullish about it.
The crypto and blockchain industry is still young and growing. So why don't we have a forecast for the future? Let me share some of my thoughts.
Massive adoption will be the main story of 2023. The gaming industry will be prior to others while seamlessly integrating with blockchain technology.
MPC solution will outrun other solutions (e.g. social recovery wallet). Infrastructure will be prepared for massive adoption (e.g. account abstraction will happen in the blockchain layer).
The application will be the content focus (user-oriented), while the app chain is more welcome than a better Layer 1.
Other than a higher fund utilisation rate, DeFi will provide seamless service along with the app chain.
In the upcoming section, I will justify myself by why and how.
Vitalik is definitely a fan of the social recovery wallet, and he published an article in January 2021 to introduce the social recovery wallet (Why we need wide adoption of social recovery wallets). However, this solution faces two key challenges:
Users need to expose some critical information to the relevant. For example, Argent users need to disclose their wallet address to their guardians, which means they have revealed the status of their assets.
The social recovery method assumes massive adoption is finished. For most massive adoption scenarios, people will not seek support from their relevant, especially when this means disclosing some financial information.
Do you really want your friends and family to know your blockchain address? Plus, not everyone has a trustworthy friend who happens to know what's blockchain.
MPC (Multi-Party Computation), on the other hand, solved these problems. MPC is a technology that can be traced back to the 80s while field-tested in the institution market for the past few years. MPC providers such as Fireblocks have custody of billions of funds already.
I am not a tech guy, so I will quote the words from Fireblocks to explain what MPC is:
MPC enables multiple parties – each holding their own private data – to evaluate a computation without ever revealing any of the private data held by each party (or any otherwise related secret information).
In an MPC, a given number of participants each possess a piece of private data (d1, d2, …, dN). Together, the participants can compute the value of a public function on that private data: F(d1, d2, …, dN) while keeping their own piece of data secret.
**However, I firmly believe that the MPC wallet will become the mainstream solution for massive adoption. The application provider, such as a gaming studio, can pack the MPC service with their application. As the user, they can access the whole blockchain world while maintaining a Web 2 experience. **
Top-tier investors earn a lot from new layer-1, like Solana, in the last bull market. So people assumed that Aptos and Sui would become the next Solana in financial return with their innovative programming language and the halo of Meta.
The innovation of Move-based blockchain and the new zk-based layer 2 is apparent. However, I will put more bets on the appchain.
An application-specific blockchain, or appchain, is a blockchain that is exclusively designed to operate one specific application instead of multiple apps like a public blockchain is designed to do.
What is an appchain?
There are lots of benefits for the developer to build on their appchain. For example, they can eliminate the gas fee for users. This will significantly increase the end-user experience while maintaining the critical advantage of using blockchain.
The content creator will soon realise they need an appchain for their game or products to gain more control. Currently, the developer can easily set up an appchain with Cosmos Zones, Polkadot Parachains, Avalanche subnets and Polygon Supernets. After all, I will be more bullish on optimistic or zero-knowledge-based and EVM-compatible appchain.
In 2022 we already saw the new layer-d1 developing by the alliance of gaming companies, such as Oasys, produced by Bandai Namco & SEGA, the traditional giant gaming company.
Oasys Architecture is built for game developers, offering a high-speed, zero gas fee experience to users by combining the best of public L1 and private L2 blockchain technology solutions.
The problem for appchain right now is about something other than the technology of establishing one but how to interoperate with other chains, like how to seamlessly connect the liquidity and DeFi service to the appchain. And this leads to our last topic.
DeFi is the most critical innovation inherited by blockchain. It was the first time humankind could conduct financial behaviour globally without an intermediary. This enables a whole new business model for the gaming industry, whereas real-life economic behaviour twists with the virtual world.
Think about it. One can borrow virtual assets with real-life money as collaterals. During this process, they don't even know about their counters, which might be a communal pool. One can create value in the virtual world, serving anyone in any corner, and get paid with real money.
In fact, there is no so-called real money, only the consensus of humans. Bitcoins act like real money in El Salvador. With the development of the user-owned virtual world and DeFi as a service, we can create an economic society with "real money" for real.
People trade the gold coin and items in World of Warcraft for decades, and some are using the items to conduct primitive financial behaviour. But with blockchain technology, we can even do more. Assets trading, lending, and even derivatives are possible.
The DeFi in 2023 will become more and more invisible, whereas the protocol serves more like a product, not an app. AAVE V3 has come across different EVM chains, while DEXs provide seamless backend API. In the foreseeable future, all these DeFi services will be wrapped into the product. When that happens, the end-user might not even know they are using a DeFi, which we call "massive adoption", isn't it?
In my picture, the future blockchain worlds will be Layer 1 + Layer 2 appchain. DeFi service will be sharding as well.
Mainstream DeFi (like stablecoin yielding and mainstream token lending) are running in layer 1 to consolidate their safety and liquidity, then bridge to layer 2 as a seamless service. In-game assets DeFi, such as NFT leading and DEX, are running in layer 2.
In this circumstance, the appchain benefit from the liquidity and safety of layer 1 while they provide the application scene and users to layer 1. And the single failure of layer 2 (or a game) will not injure the stability of layer 1.
It takes time for the technology to be mutual. In the early centre, the dot-com bubble just crashed, but after that, we have thirty years of the Internet golden age. There is no doubt that blockchains have bubbles, but we must see through the night.
The bearish market will pass, and the golden age will come.
Arthur: ccrunchen.eth
Publish: 2023/01/05
Last modified: 2022/01/05